In this video, I will share with you how to invest in recession proof US stocks from the
“Warren Buffett’s Perspective”!
I will also share my top 3 US stocks pick in 2020 at the end of the video
Trust me on this! you do not want to miss that part so stay until the end!
Hello everyone, It’s CODY here.
If You want to invest in US Stocks but don't know what to buy in a crash,
The video I am sharing today is for you!
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Before I go into my top 3 US stocks in 2020 I would like to mention one person.
He is regarded as the “Michael Jordan” in the investing industry.
He is considered one of the most successful investors in the world.
Here goes his famous baseball analogy The trick in investing is just to sit there
and watch pitch after pitch go by and wait for the one right in your sweet spot,
and if people are yelling, 'Swing, you bum!' ignore them.
If you have not guessed it by now, you are…f...feel free to click the like
button below!
Yes, it’s Warren Buffett!
I might have just revealed the secret of his investing strategy in this picture!
The average return for the S&P 500 index over the past 90 years is only “9.8%”.
Lots of investors will be very happy with this number.
But yes, I said “only 9.8%”, because Warren Buffett has been doubling this growth.
His portfolio has an annual average return of “20.5%” since it began trading in “1965”.
Therefore, I feel like it’s worth mentioning three key takeaways from Warren Buffett:
Number 3: “The best time to load up on stocks is when everyone else is selling”.
As Buffett himself puts it, The best chance to deploy capital is when things are going
down.
Number 2: Buy stocks with the expectation of “holding them for no less than a decade”.
So we know that Buffett only invests in stocks he believes that will thrive long-term.
Number 1: Buy high-quality companies with “strong brand recognition”, “healthy
finance”, and a “well-established competitive advantage”.
These types of companies can better handle economic downturns.
Now that we have witnessed how Warren Buffett plays ball, we can now get into the best part
of this video.
My top 3 Recession Proof US stocks in 2020 Stock #3: Coca-Cola (KO)
Coca-Cola is a non-alcoholic beverage company that has refreshed us for over a century now.
Coca-Cola is one of the most recognized brand names in the world.
Here are the 4 key facts:
Fact #4: Speed to Adapt The U.S. population has become conscious with its health.
Coca-Cola was the first to come up with a diet version of its favorite classic,
Coca-Cola, which has now become the second most-selling soft drink
after regular Coca-Cola.
It has also put a lot of effort into creating and marketing healthy alternatives for soda.
Its healthy alternatives include brands like Dasani bottled water, Minute Maid juices,
and PowerAde.
Fact #3: Dividend Increased: The Stock Has a good dividend history and
it currently pays a dividend yield of 3.6%.
Oh, and if you’re concerned about it raising its dividend in 2019 and beyond,
don’t be!
Because Coca-Cola has increased the dividend for “57 consecutive years”.
There are Dividend Aristocrats, and there’s Coke.
Some people think Coke is too boring but hey, boring gets the job done!
Fact #2: Recession Proof: Bull markets don't last forever.
Let's take a look at Coca-Cola's business over the course of the
last financial crisis between 2007 to 2009.
We actually saw its revenue rose double digits year over year.
It’s business performed even better during the last economic downturn.
Now, the fact that Coca-Cola's business performed well through the recession
doesn't mean the stock price wasn't impacted.
The share price actually dropped about 37% while the company's fundamentals remained
the same!
As of today, the share price dropped about 25% from it’s all-time high.
I am not sure about you, but it seems like a great buying opportunity to me!
Fact #1 Warren Buffett's Favorite: Coca-Cola is one of Buffett's favorite stocks
after he began purchasing the stock in 1988.
Berkshire Hathaway now owns 9.3% stake of this company.
The company has sustained its performance over the last few decades and continued to
gain market share.
And, at the end of the day, who doesn’t like to get paid some juicy dividend to drink
some “Coke”!
Stock #2: Apple (AAPL) I have many reasons but I only bring the best
3: Reason Number 3: IPhone & Wearable:
The company is undergoing another transformation as a market leader in wearables,
no competitor has yet proved as successful as Apple.
First quarter in 2020, it represents the first time net sales in
the division including wearables exceeded the company's
iconic Mac division.
Now that the wearables division is steadily growing,
This trend could signal Apple's evolution beyond the iPhone.
Like it did with smartphones, Apple is positioned to be the industry leader
for wearables.
Apple is also preparing to release up to five new iPhones in 2020,
Although it might be delayed, We are expecting to see this “Here we go
again scene”
Reason Number 2: Reserve of Cash: As of December 2019,
Apple had over $200 billion in cash and marketable securities.
To put that into perspective, the entire market capitalization of Disney is roughly $150 billion.
The sum is surely a sufficient stockpile to survive whatever period of economic uncertainty
we will be facing in the next several months.
Apple also invests in highly rated securities and buys back their own shares.
In the most recent quarter, the company repurchased $20.7 billion of common
stock, which bought 70 million Apple shares.
That means the company paid an average price of roughly “$295 per share”.
The last time I checked Apple’s stock price was at “$247”.
If the share price continues to fall, it increases the possibility of more massive
repurchases.
If Apple is happy to buy back their shares at “$295” or “$247”,
I will be more than happy to buy their stocks at an even lower price!
Now we come to my #1 reason and this one never failed to amaze me
Apple’s Product and Strategy: Apple demonstrates “Simplicity” to the
best!
We don’t need more complex products and marketing to overwhelm us with information.
Apple understood this concept early on and made sure that it's as simple as possible.
I believe most people out there are just like myself.
I just want my phone to be easy to use and it looks cool!
Using Apple products also makes us feel like it “Stands For Something”.
I invited my friend Steve Job over to explain this using the Nike Analogy.
Trust me no one can explain it better than him
There you have it.
You can leave a comment below to tell me what using Apple products stands for you!
To sum it up, Apple has a unique strategy and enough cash
on hand to survive even a prolonged global recession.
Eventually, contracting economic activity will give way to expanding,
and this incredible tech stock will be on the rise again.
Before I show you my #1 Pick I will like to show you a short clip from
Warren Buffett himself
So If Warren Buffett can pick out 3 of Berkshire’s businesses
and he would be happy If those are the only businesses
that Berkshire own and they have all the money in it.
Now... if Buffett has all his money in Berkshire Would you say that maybe… just maybe…
The top 3 most valuable investments in Berkshire are the 3 businesses Buffet was talking about?
Now Let’s introduce my #1 stock pick: VISA (V)
I will give you 3 key reasons why.
Reason number 3: If you have a Visa card, your transactions are made on the World's
Largest Payment Network.
A payment network acts as the technological backbone between you,
the consumer and a merchant's bank.
You are using your visa credit whether you are shopping in a “physical store”
or “online”.
Visa remains as one of the most obvious players to
benefit from the world's shift to digital payments.
Reason number 2: Open-Loop Credit Card: Visa runs an open loop credit card system,
meaning it doesn't directly lend money to consumers.
Instead, Visa makes money by taking small slices of each purchase
facilitated with its network.
While Visa doesn't make money on the interest of its users' card debt,
it also doesn't face the credit default risk.
In contrast, Visa’s biggest competitor American Express
runs a Close-Loop Credit Card system.
The negative to this business model is that it exposes the company to credit risk.
This means that during an economic downturn, when consumers lose jobs and cannot pay their
bills, Amex is left holding the bag.
And that’s why even though it’s Buffett’s fourth valuable holding.
I still pick Visa over American Express
Reason number 1: Blockchain Technology and Cryptocurrency
Visa has fully embraced new technologies and forms of payment,
including blockchain and cryptocurrencies.
In 2019, Visa signed up “Coinbase”, one of the major brokerages for buying, selling,
and holding Bitcoin.
The new deal will allow a Visa cardholder to
pay for goods and services from a Coinbase account using cryptocurrency.
More recently, Visa announced a partnership with the Libra Association,
a governing body overseeing the new Libra digital currency
proposed by “Facebook”.
Though some may think of new payment technologies as a threat to Visa,
the company is determined to partner with every form of payment out there,
and open its world-class networks to those flows.
I know..
I know… for you smart people, you might be saying” But Cody,
you said if Buffett only owns three companies in Berkshire,
it makes sense to be his top 3 valuable investments”.
I am glad that you noticed that and I will tell you why i am not looking at Bank
of America (BAC) at the moment:
I will start with Reasons to Concern: The bank’s income is divided into two main
categories: “interest income” and “other income.”
Interest income brings in more than 50% of the Bank's net revenue.
With recently cut interest rates, It is generally bad news for the banking sector,
as it means most banks are likely to earn less revenue
on loans while all other things remaining equal.
More importantly, I don’t like their the Stock Price & Dividend History
Bank of America had been gradually increasing their dividend along with stock
price from the 1990s to 2008.
When the stock price plummeted in 2008, the 43.65% of dividend was short-lived and
soon to be reduced to “1/10” of the dividend payment before 2008.
And it continued to hold the dividend steady until 2014.
That is “6 years” after 2008 that the dividend finally started increasing.
Also, It’s worth mentioning that the stock price
“never recovered” back to its previous high of $41 dollar in 2008.
Therefore, if any investor had purchased the stock back in 2008
they might still be waiting for the stock to come back to this level….
However, it’s worth mentioning about Cash on hand:
Bank of America held a healthy 673 Billion cash as of 2019.
Why is it essential for banks to have so much cash?
In banking, liquidity is the ability to meet obligations when they come due.
As individuals and businesses start withdrawing more money and
loans to keep ends meet in this market downturn, it’s very important to make sure there is
enough money to be withdrawn.
Sorry Buffett, due to the fact that Bank of America might
run into some trouble, and it’s stock price and dividend history,
I am not considering this stock in 2020.
On the flip side, it will most likely come out of these troubles
in one piece nonetheless.
To sum it all up, I feel strongly about good growth dividend
stocks like “Coca Cola (KO), Apple (APPL) and Visa (V)
especially during a downturn in the market.
Good quality stocks tend to outperform low quality stocks.
Also, they “Manage Short-Term Risk” and never lose sight of the “Long-Term Innovations”.
In the future, if you want to hear more good quality U.S. stocks,
or any stock you are eager for me to analyze, let me know in the comment section below!
If you want to learn more about “Recession proof Canadian Stocks” in 2020,
I have included the link above
Hope you all are investing carefully in the time like this.
No one knows where the bottom is so “don’t spend all your money at once”!
Anyway, thanks for watching, If you like videos like this,
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